IN THE INCOME TAX APPELLATE TRIBUNAL,
MUMBAI BENCH "C", MUMBAI
BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND
SHRI SANJAY GARG, JUDICIAL MEMBER
M.A. No.366/M/2013
(ITA No.7626/M/2011)
Assessment Year:2008-09
M/s. Poona Galvanizers Pvt. Dy. CIT 8(2)
Ltd., Mumbai
705, Morya Landmark, II,
Vs.
Oshiwara Link Road,
Andheri (W)
Mumbai
PAN:AADCP2111R
(Appellant) (Respondent)
Assessee by : Shri B.V. Jhaveri
Revenue by : Shri Pitambar Das, D.R.
Date of Hearing : 20.12.2013
Date of Pronouncement : 23.12.2013
ORDER
Per Sanjay Garg, Judicial Member:
The present miscellaneous application has been moved by the
assessee/applicant under section 254(2) of the Income Tax Act, for recalling of
the order dated 24.07.13 passed in ITA No.7626/M/11, with the pleading that
there is a mistake apparent from the record in the above said order.
2. It has been contended that on the date of hearing of the above noted
appeal, an adjournment application was moved by the partner associate of
Chokshi & Chokshi, Chartered Accountants i.e. representatives of the assessee.
Vide said application, Shri Rajnikant Chokshi, Chartered Accountant, the ld.
representative of the applicant/assessee had sought adjournment on the ground
that Mr. M.R. Chokshi, another parner of Chokshi & Chokshi, Chartered
Accountants was not able to reach the court due to heavy rains. However, the
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(ITA No.7626/M/2013)
M/s. Poona Galvanizers Pvt. Ltd.
Tribunal in the course of hearing informed Shri Rajnikant Chokshi- Chartered
Accountant of the assessee company, that the issue involved in the appeal was
a covered issue and therefore it could be disposed off, hence the application for
adjournment was not considered. It has been pleaded that during the course of
hearing the ld. representative of the assessee namely Shri Rajnikant Chokshi,
Chartered Accountant drew attention of the Members of the Tribunal that in
the above noted appeal, the contention of the applicant/assessee company was
that the amount given in the course of business had been treated as `loans and
advances' and therefore the provisions of section 2(22)(e) of the Income Tax
Act had no application. It has been further pleaded that the Members of the
Tribunal had informed the representative of the applicant that the said
contention of the applicant would be considered. The appeal of the assessee
company was decided by the Tribunal on the same day i.e. 24.07.13 itself and
the same was dismissed. It has been further contended that while dismissing
the appeal of the assessee company, the Tribunal observed that the assessee
had not produced any evidence to substantiate his claim that the transaction
between the two companies was not in the nature of the loan but in the nature
of business transaction. It has been further contended that on the said date of
hearing the ld. representative of the assessee company namely Shri Rajnikant
Chokshi, Chartered Accountant had sought the adjournment before the
Tribunal, however, the said request was rejected by the Tribunal and therefore
the applicant company was not given an opportunity to file necessary papers to
substantiate its contention that the transaction was a business transaction. It
has been further pleaded that this contention was not only raised by the
assessee before the AO but also before the CIT(A), but the same was rejected
by them. It has been further pleaded that an alternate contention was also
raised before the ld. CIT(A) relying upon the decisions of the Hon'ble Bombay
High Court in the case of CIT vs. Universal Medicare Pvt. Ltd. (2010) 324 ITR
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(ITA No.7626/M/2013)
M/s. Poona Galvanizers Pvt. Ltd.
263 and special bench decision of Mumbai Tribunal in the case of Bhaumik
Colour Pvt. Ltd. 313 ITR(AT) 146 to the effect that even if it is held that
advance/loan attracted the provisions of section 2(22)(e), the addition has to be
made in the hands of the registered share holder i.e. Shri H.M. Singh and not
the assessee company. It has been further contended that the CIT(A) accepted
the alternate contention of the assessee/applicant and observed that the
assessee was not a share holder in sister concern and the additions made by the
AO in the case of the assessee were ordered to be deleted with further
observation that the AO may consider making addition in case of share holder
Shri H.M. Singh. Aggrieved from the order of the CIT(A) the assessee had
come in appeal before the Tribunal with the following grounds of appeal:
"a) The learned Commissioner of Income Tax (Appeals) has erred in
confirming that the transaction between the two companies is in the
nature of a loan and not in the nature of a business transaction thereby
invoking the provisions of section 2(22)(e) of the Income Tax Act, 1961
without considering the facts and circumstances of the case. The same
be deleted.
b) The learned Commissioner of Income Tax (Appeals) has also
failed to consider the various supporting produced before the Assessing
Officer as well as CIT(A) in regard to explanation that the transaction
between the two companies are in the normal course of business. The
same be considered and addition be deleted."
3. It has been further contended that since the applicant/assessee had not
been given the opportunity by the Tribunal to substantiate the fact that the
transaction between the applicant company and M/s. Karamtara Fasteners Pvt.
Ltd. was of business in nature, by way of filing the necessary papers/evidences,
which were also filed before the AO and the Commissioner. With the above
said averments the applicant has sought the recalling of the order citing the
reason of mistake apparent on the record of the order.
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M/s. Poona Galvanizers Pvt. Ltd.
4. We have heard the ld. representatives of both the parties and also have
gone through the records. From the averments made in the application, it is
revealed that the alternate ground of the assessee had been accepted by the
CIT(A) and the additions made by the AO were ordered to be deleted. The
grievance of the assessee was that its contention regarding the transaction
between the two companies being a business transaction was not accepted by
the lower authorities.
5. It has been specifically contended by the assessee in para 7 of the
application that the adjournment request made by Shri Rajnikant Chokshi,
Chartered Accountant, ld. representative of the assessee was rejected by the
Tribunal and thereafter the case was heard on merits. It is not the case of the
assessee that Shri Rajnikant Chokshi, Chartered Accountant, was not the
representative of the assessee or he was not competent to appear, plead or
argue on behalf of the assessee. A perusal of the record reveals that a power of
attorney was duly executed by the assessee in favour of partners of Chokshi &
Chokshi, Chartered Accountants including Shri Rajnikant Chokshi, Chartered
Accountant. The alleged application was also moved by Shri Rajnikant
Chokshi on behalf of Chokshi & Chokshi Chartered Accountants.
When the ld. representative/C.A. duly authorized by the assessee was
present before the Tribunal and Tribunal also heard him on the matter then
under such circumstances it cannot be said that the case of the assessee has
been decided unheard by the Tribunal. Merely because, the other partner-
chartered accountant could not reach before the Tribunal, itself, could not be a
ground for which the Tribunal should have mandatorily adjourned the appeal
fixed for hearing on the said date. So far the ground that the assessee could not
file the record papers due to hearing of the matter on the said date is also not
tenable. The assessee was well aware that its contention that the transaction
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M/s. Poona Galvanizers Pvt. Ltd.
between the two companies was a business transaction had been rejected by
the lower authorities. At the time of filing the appeal itself, it was the duty of
the assessee to attach the necessary documents with the appeal file, upon which
it wanted to rely upon. There is no specific provision or any rule provided
either under the Income Tax Act or under Income Tax Rules or The Income
Tax Appellate Tribunal Rules or any other related statute, giving any right to
the appellant for seeking recalling of the order on the ground that on the date of
hearing it could not produce the documents which were relied upon by it
before the lower authorities. Whatever documents the appellant wanted to
produce, were in the very much knowledge and possession of the appellant and
that could have been attached with the grounds of appeal itself. Moreover, in
the alleged application for adjournment no such plea was raised that the
assessee wanted to produce some other documents. The contentions raised by
the assessee after hearing the ld. representative of the assessee were considered
by the Tribunal and the contention of the assessee that the transaction in
question was a business transaction has been rejected by the Tribunal.
The scope of section 254(2) is very limited under which an order can be
amended or rectified by the Tribunal where there is a mistake apparent on the
record of the order. However, from the perusal of the impugned order, there
appears no mistake apparent on the record. The ground that the assessee could
not produce the relevant documents relied upon by the assessee before the
lower authorities in our view not a ground which can be considered to be a
mistake apparent on the record. Even it was the discretion of the Tribunal
either to accept or reject the adjournment application and when it is the case of
the assessee itself that the same was rejected and even the ld. representative of
the assessee was duly heard on merits, under such circumstances it cannot be
said that there was any mistake committed by the Tribunal which is apparent in
6 M.A. No.366/M/2013
(ITA No.7626/M/2013)
M/s. Poona Galvanizers Pvt. Ltd.
the order dated 24.07.13. If the representative of the assessee had not filed the
documents relied upon by it before the date of hearing itself, then he himself is
responsible for the lapse or lack of due diligence on his part but it cannot be
said to be a case of any mistake apparent on the record.
6. Before parting with the order, we may also observe that the additions
made by the AO in the case of assessee have already been deleted. It may be
observed that the ld. CIT(A), while accepting the alternate argument of the
assessee, had observed that the AO may consider the additions in the case of
share holder namely Shri H.M. Singh. Regarding that finding, the assessee had
also raised a ground of appeal before the Tribunal as ground No.1(c) which has
not been reproduced by the applicant in its application while reproducing the
other grounds. The said ground No.1(c) of the grounds of appeal is reproduced
as under:
"1(c). Without prejudice to above, the learned Commissioner of Income
Tax (Appeals) has erred in stating that the Assessing Officer may
consider bringing to tax the deemed dividend in the hands of Mr. H. M.
Singh, the shareholder having substantial interest in both the Companies
without considering the facts and circumstances of the case. The same
be deleted."
7. The assessee perhaps deliberately did not reproduce the said ground
while making the present application. The grievance of the assessee is perhaps
relating to the finding of the CIT(A) further confirmed by the Tribunal that the
AO may consider of making the additions in the hands of shareholder namely
Shri H.M. Singh.
8. We may observe that the said `Shri H.M. Singh' would have
independent right to contest such additions if so made by the AO but so far the
assessee company is concerned, it has no locus-standi to contest the same. It
7 M.A. No.366/M/2013
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M/s. Poona Galvanizers Pvt. Ltd.
was the contention of the assessee company only, that the addition if could be
made, that would be in the hands of Shri H.M. Singh, shareholder, having
substantial interest in both companies and not the assessee company. The said
contention was accepted by the CIT(A). As observed above, thereafter the
assessee company has challenged, vide ground No.1(c), the observation of the
ld. CIT(A) that addition if any can be made in the hands of Shri H.M. Singh.
The assessee company in fact by raising ground No.1(c) in the grounds of
appeal before the Tribunal has challenged/contradicted its own stand taken
before the ld. CIT(A). In the present application the applicant has deliberately
concealed this aspect of the matter which shows that the applicant has not
come to the court with clean hands while moving the present application and
has concealed material facts and under such circumstances also the contention
of the applicant cannot be sustained.
9. At this stage, the ld. D.R. has pointed out that the Revenue has already
filed an appeal before the Hon'ble Bombay High Court against the deletion
made by the CIT(A) in the case of the assessee further confirmed by the
Tribunal. Since the Hon'ble Bombay High Court has already been seized off
the matter and the assessee will also have opportunity to raise his grievances, if
any, by way of cross appeal/cross objections before the Hon'ble High Court
and under such circumstances it would otherwise be not proper for this
Tribunal to recall the impugned order.
Moreover, the assessee has sought the recalling of the order by way of
seeking the review of the order passed on merits, but not for any rectification
of mistake apparent on record which otherwise is beyond the scope of
provisions of section 254(2) of the Income Tax Act.
8 M.A. No.366/M/2013
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M/s. Poona Galvanizers Pvt. Ltd.
10. In view of our above observations, we do not find any merit in the
application of the assessee and the same is hereby dismissed.
Order pronounced in the open court on 23.12.2013.
Sd/- Sd/-
(P.M. Jagtap) (Sanjay Garg)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated: 23.12.2013.
* Kishore
Copy to: The Appellant
The Respondent
The CIT, Concerned, Mumbai
The CIT (A) Concerned, Mumbai
The DR "C" Bench
//True Copy// [
By Order
Dy/Asstt. Registrar, ITAT, Mumbai.